I know it is a sacrilegious to say this in MMM forums where people follow the bogleheads philosophy of investing.
But here it goes...
MSCI Emerging markets index is way too broad for me :-(
It is way to heavily weighted in favor of China. I don't like China for a several reasons, but the standout reason is their demographic headwind. They will get old before they get rich!!
I am not super hopeful on the overall EM doing that great in the next 30 years or so when it is weighed down so heavily by China!!
Now if there was something (or a combination of things) that focuses on SE Asia + India then we would be good to go. :-)...
I was anti-Japan for the same reason - their demographics are truly horrendous. I hold a Asia ex-Japan fund for this reason.
We'll see what happens, but if the demographics do prove to be a drag on China then the indexes will automatically shift to downsize China weighting and bump up other growing economies'. Overall I'm still positive as I think demographics are more in favour for EMs that they are for developed markets. It is also worth pointing out that as any economy grows and a middle class develops it will natrually attract immigrants from other countries.
>> It is also worth pointing out that as any economy grows and a middle class develops it will natrually attract immigrants from other countries.
I would contest this sentiment very strongly!!
This is equally dependent on the "culture" of the country in question. Yes, UK/US/Canada/Aus attracts a large number of immigrants.
Not so with Japan. Largely not true even for other Western European countries - except if you mean immigrants from other EU countries.
I don't think Chinese culture is quite as insular as the Japanese, but neither is it as open as Canada (or even US) for example.